One of the most common enquiries in estate litigation relates to the beneficiaries’ dissatisfaction with the named executor/trustee and their intention to either pass over or remove him or her.
Passing over or removing an executor/trustee is very often a difficult task to achieve as the law has been clear for many years that the deceased’s right to nominate his or her executor is not to be lightly interfered with: Re Wolfe (1957) 7 DLR (2d) 215 at 219 (BCCA).
Passing over an executor utilizes essentially the same legal criteria as removing an executor except that a passing over occurs before the named executor starts to act in a representative capacity.
Section 158 of the Wills, Estates and Succession Act [SBC 2009] c. 13 (“WESA”)
Section 158 is a new provision where persons interested in the estate, including beneficiaries, intestate heirs, creditors and co-executors can apply to remove or pass over a person entitled to be the personal representative.
It must be noted that removal as a personal representative does not remove the person as a trustee, as the latter must be done under the Trustee Act. Whereas most personal representatives are named as the executor and trustee of the will, (or are court- appointed administrators), there is a distinction between the two roles of executor and trustee which can become important when applying to pass over or remove a personal representative, such as an executor.
S.158(1) defines pass over to mean grant of probate or administration to a person who has less priority than another person to become a personal representative.
A person having an interest in an estate may apply to the court to remove or pass over a person otherwise entitled to be or to become a personal representative.
S.158(3) codified some of the common law decisions by setting out some of the criteria that the court may consider in adjudicating an application to either pass over or remove a personal representative such as the named executor as follows:
a) refusal to accept the office of or to act as personal representative without renouncing the office;
b) is incapable of managing his or her own affairs;
c) purports to resign from the office of personal representative;
d) being a Corporation, is dissolved during liquidation;
e) has been convicted of an offense involving dishonesty;
f.) is an undischarged bankrupt
g) is:
i) unable to make the decisions necessary to discharge the office of personal representative;
ii) not responsive, or
iii) otherwise unwilling or unable to or unreasonably refuses to carry out the duties of a personal representative
The aforesaid criteria must show that the personal representative is hampering the efficient administration of the estate, or a person granted power over financial affairs under the Patients Property Act (RSBC 1996) c.349.
Section 159 WESA
Section 159 of WESA is also a new provision that states that if the court discharges or removes a personal representative, the court must appoint another person who consents to act as the substitute personal representative, unless the administration of the estate is completed or the court does not consider it necessary that a new appointment be made.
Cases Involving Passing Over
In Re Thomasson Estate, 2011 BCSC 481, the court passed over the named executor by reason of personal conflict of interest.
The court stated that the application was not to remove the executor but simply to pass over him so that an enquiry can be undertaken of the transfer of the property to him and his wife by the deceased in 2006, and a determination can be made if any further actions need be taken in regards to the property.
There was a perceived conflict of interest between the named executor in his role as an executor and his interest in his personal capacity regarding the property transfer that was being challenged and he was passed over.
In Re Haggerty Estate 21 WWR 85 BCCA, a grant was refused where the named executor had within the last year been convicted of a crime involving misappropriation of estate funds.
The court stated that while a testator’s choice of executor should not be lightly interfered with, this was a proper case where discretion should be exercised by refusing the grant to the named executor. The court discussed a long line of authorities which state that evidence of bad character alone is not a sufficient ground for refusing a grant.
However, in Re Oughton, 40 ETR 296, Oughton, a notorious sex offender who was sentenced to an indeterminate sentence, was not passed over as executor on the basis that his circumstances were not sufficient to justify passing him over.
In Stadelmier v. Hoffman 25 ETR 174, however, the court passed over one of four named executors where the other three intended to bring action against the fourth on the basis of undue influence with respect to some large inter vivos gifts. The court exercised its discretion to pass over due to the position of actual conflict that the fourth executor was in. He could not in his capacity of executor attack the gift to himself, while at the same time maintain in his personal capacity that the gifts were proper.
Courts are hesitant to interfere with the testator’s right to nominate his or her executor trustee.
The court does, however, have both a statutory power under s. 31 of the Trustee Act, RSBC 1996, c. 464 and an inherent power to remove or pass over a trustee or executor: Mardesic v. Vukovich Estate (1988), 30 BCLR (2d) 170 (BCSC); Seaton Estate, Re, 2003 BCCA 555 (BCCA).
In fact, in Crawford v .Jardine (1997) OJ No. 5041 at para. 18, the court stated that removal of an estate trustee should only occur on the clearest of evidence that there is no other course to follow.
The court further stated that it is not every mistake or neglect of duty on the part of the trustees which will lead to the removal. It must be shown by the applicant that the non-removal of the trustee will likely prevent the trust from being properly executed.
Section 31 of the Trustee Act (RSBC 1996) c. 464
If it is expedient to appoint a new trustee and it is found inexpedient, difficult or impracticable to do so without the assistance of the court, it is lawful for the court to make an order appointing a new trustee or trustees, whether there is an existing trustee or not at the time of making the order, and either in substitution for or in addition to any existing trustees.
In Mardesic the court removed the trustee because he was in a conflict of interest with the interests of all the beneficiaries of the estate, noting that s. 31 conferred a very broad power on the court.
The test for removal of an executor or trustee is set out in Conroy v. Stokes, [1952] 4 DLR 124 (BCCA), where the Court confirmed at pp. 126-127 that the main test for removal of a trustee is the welfare of the beneficiaries.
It is somewhat trite law that the court’s main guide in deciding to remove an executor or trustee should be the welfare of the beneficiaries: Letterstedt v. Broers (1884) 9 App. Cas. 371.
The sanction of removal of an executor or trustee is not intended to punish the executor or trustee for past welfare of the beneficiaries, but instead is to protect the assets of the trust and the interests of the beneficiaries. However, past misconduct that is likely to continue will often be sufficient to justify removal.
In Dirnbeger Estate (2016) BCSC 439 the court considered an application for removal and replacement of an executor. The executor had in fact retained numerous professionals to assist, but eventually dismissed each one due to his inability to maintain a professional relationship with them. After four years the estate remained undistributed.
The court, citing Conroy v. Stokes (1952) 4 DLR 124 set out the four categories of conduct on the part of an executor or trustee that warrant removal:
- endangerment of the trust property;
- want of honesty;
- want of proper capacity to execute duties; and
- want of reasonable fidelity.
The court removed the trustee due to his inability to discharge his duties after four years, and to maintain relationships with trustees, as well as his unaccountable hostility towards a sibling who was a beneficiary and an alternate executor.
Conclusion
The courts are most reluctant to interfere with the deceased’s right to nominate his or her executor/trustee, and it is only the most egregious conduct, that harms or potentially harms the best interests of the beneficiaries, that will prompt the court to pass over, or alternatively, remove an executor or trustee and substitute another.
Each case is very fact-specific and most applications to remove an executor are vigorously contested as there are often great personal conflicts between the beneficiaries and the named executor/trustee. However, emotional conflict is not a major factor in the court’s decision as to whether to pass over or remove an executor/trustee and substitute another.
